What is net worth (and how to track it)?
What you'll learn
Understand what net worth is, how to calculate it, and why it is the simplest scoreboard for progress.
Net worth is everything you own minus everything you owe. It is one number, and it is the simplest honest scoreboard for whether you are actually getting ahead - far better than your salary, which only measures what flows in.
The two sides
- Assets are things of value: cash, savings, pensions, investments, your home, even a car.
- Liabilities are what you owe: mortgage, loans, credit-card balances, overdraft.
Add up each side, then subtract. The result is your net worth.
The figures below are illustrative only - made-up numbers to show the sum. Your own will differ.
| Step | What to total | Example (illustrative) |
|---|---|---|
| Assets | Cash, pensions, investments, property | £180,000 |
| Liabilities | Mortgage, loans, card debt | £110,000 |
| Net worth | Assets minus liabilities | £70,000 |
How to track it
- List every asset and every debt in a simple spreadsheet or note.
- Update it monthly or quarterly - not daily.
- Watch the trend, not the single figure. A line that rises over a year is the win.
- Consider tracking liquid net worth (excluding your home) too, since you cannot easily spend bricks.
The figure will bounce around with markets and big purchases. That is normal. One rising trend line over time is what tells you the plan is working.
Key takeaways
- Net worth = assets minus liabilities, captured as a single snapshot.
- It is a truer scoreboard than salary because it counts what you keep.
- Update monthly or quarterly and watch the trend, not the wobble.
- A negative figure is common early on; the goal is a line that rises.
Illustrative only. Made-up figures to show the sum: total assets minus total liabilities equals net worth. Your own numbers will differ and this is not a forecast.
Frequently asked questions
Should I include my home in my net worth?
You can do it either way. Many people track total net worth (home included) and liquid net worth (cash and investments only) side by side, because the home is hard to spend.
Can net worth be negative?
Yes. If you owe more than you own - common early on, especially with a student loan or mortgage - your net worth is negative. The aim is to make the number rise over time.
How often should I update it?
Once a month or once a quarter is plenty. Tracking too often invites stress over normal market wobbles, which tells you nothing useful.
General information, not financial advice. The value of investments can fall as well as rise, and figures and rules can change; check the current position before acting.